White House analyst warned against Solyndra loan
Don’t look now, but the Solyndra scandal is coming back up in the media. The now-defunct, politically-connected green energy company was given a sweetheart $500+ million loan from the Obama Administration back in 2009. By August 2011, Solyndra had filed for bankruptcy, leaving taxpayers on the hook for millions.
Supporters of heavily subsidized green energy projects downplayed cronyism, which runs rampant in the Obama Administration. But new e-mails show that a White House analyst warned that giving taxpayer money Solyndra would be a big mistake (emphasis mine):
As the Obama administration moved last year to bail out Solyndra, the embattled flagship of the president’s initiative to promote alternative energy, a White House budget analyst calculated that millions of taxpayer dollars might be saved by cutting the government’s losses, shuttering the company immediately and selling its assets, according to a congressional investigation.
Even so, senior officials in the White House’s Office of Management and Budget did not discourage the Energy Department from proceeding with its plan to restructure a federal loan to Solyndra — a move that put private investors ahead of taxpayers for repayment if the company closed, the investigation by Republicans on the House Energy and Commerce Committee found.
The restructuring went forward, but within months Solyndra failed anyway, leaving federal taxpayers on the hook for much of the half-billion-dollar federal loan. Now, a year after the company’s collapse, debate continues over whether the refinancing plan was legal or a wise investment. Last week, Solyndra’s final liquidation plan estimated that the government will recover just $24 million of the $527 million that taxpayers lent to the company.
Details about the debate emerge in internal government documents. They show that Energy Department officials argued that Solyndra might be able to pull out of its downward spiral if given an emergency infusion of cash.
They also show that career OMB staff members circulated a series of e-mails emphasizing the risks of restructuring the loan. In congressional testimony last year, the agency’s deputy director suggested that career staff members made the final determination about what to do and “used their best expertise.”
This scandal, while not on par with the seriousness of Operation Fast and Furious, is certainly concerning. According to an e-mail released yesterday by the Republican National Committee, Solyndra’s CEO called the Obama Administration the “Bank of Washington.” Given President Obama’s eagerness to give out money like candy to anyone with some sort of “green energy” idea, it highlights the risks put on taxpayers.
If a project is worthwhile, it will attract private capital to bring it fruition. Government subsidies and loans only distort the market by picking winners and losers. It also puts into perspective the problems with cronyism, where taxpayer dollars are so freely given out — even forced through against advisement, as in this case — to companies that are politically-connected. And the sad thing is, Solyndra isn’t the only green energy company that has received sweetheart loans from the Obama Administration. There are other, including some that have met the same fate.
For some perspective on the Solyndra, here Jon Stewart, who slammed the Obama Administration over the loan last September and highlighted the cronyism of the White House involved in the decision: